Five-minute digest
NLRB v. Jones & Laughlin Steel Corp.
Summary
The National Labor Relations Act of 1935, often called the Wagner Act after Senator Robert F. Wagner of New York, guaranteed employees the right to organize and bargain collectively through representatives of their own choosing, defined unfair labor practices by employers, and created a National Labor Relations Board to enforce it. Congress grounded the act in its power over interstate commerce, finding that refusals to bargain led to strikes that obstructed the flow of goods. The Beaver Valley Lodge No. 200 of the Amalgamated Association of Iron, Steel and Tin Workers charged that the Jones & Laughlin Steel Corporation, the fourth largest steel producer in the country, had fired union members at its Aliquippa, Pennsylvania, works to discourage organizing. The Board ordered ten men reinstated with back pay, and when the company refused, it asked a federal court of appeals to enforce the order. That court declined, holding that the act lay beyond federal power as applied to manufacturing. The company argued that the act regulated labor relations rather than commerce, that steelmaking was a local activity outside federal control, and that the reinstatement and back-pay order denied due process and jury trial. The Board answered that Jones & Laughlin was a vast integrated enterprise, owning mines, railroads and steamships and shipping most of its product across state lines, so that a strike at Aliquippa would choke a national flow of commerce. On 12 April 1937 the Court reversed by five votes to four. Chief Justice Hughes held that Congress may regulate intrastate activities that have a close and substantial relation to interstate commerce, and that the question is one of degree, not of formal categories such as production versus commerce. He cautioned that the power must be read in light of the dual system of government and may not reach effects so remote that it would erase the line between national and local. Applied to an industry organized on a national scale, however, the effect of labor strife was immediate and could be catastrophic. He described the right of employees to organize as fundamental, noted that the act compels no agreement and leaves employers free to hire and fire for other reasons, and rejected the due process and Seventh Amendment objections. Justice McReynolds, joined by Justices Van Devanter, Sutherland and Butler, dissented in this case and its two companion cases, relying on Schechter Poultry and Carter v. Carter Coal Co. to argue that the effect of a manufacturer's labor relations on commerce was indirect. The library text contains only the Chief Justice's opinion, with notes left out; McReynolds's dissent must be read elsewhere. The decision opened the way for federal labor law in nearly every industry. Congress revised the act in the Taft-Hartley Act of 1947, and the Court relied on the close-and-substantial-relation standard in Wickard v. Filburn (1942), while United States v. Lopez (1995) recalled Hughes's warning about obliterating the distinction between what is national and what is local.
Top Lessons
Direct and indirect effects on commerce
Earlier decisions such as Schechter and Carter Coal had held that Congress could regulate only activities with a direct effect on interstate commerce. Hughes replaced the formal line between production and commerce with a practical question of degree, asking whether an activity's relation to commerce is close and substantial.
Federalism as a limit
Even while upholding the act, Hughes wrote that the commerce power must be considered in light of the dual system of government and must not create a completely centralized government. Later courts have quoted that sentence both to expand and to restrain federal power, which makes it a useful study in how a single opinion can serve different purposes.
The right to organize and the employer's rights
Hughes treats workers' freedom to choose representatives as parallel to the company's freedom to choose its officers, and he stresses that the act compels no agreement. The company's side regarded the act as one-sided, regulating employers while leaving unions unrestrained, a criticism Hughes acknowledges but leaves to Congress.
Verified Quotes
Frequently cited
“That is a fundamental right. Employees have as clear a right to organize and select their representatives for lawful purposes as the respondent has to organize its business and select its own officers and agents.”
Frequently cited
“Although activities may be intrastate in character when separately considered, if they have such a close and substantial relation to interstate commerce that their control is essential or appropriate to protect that commerce from burdens and obstructions, Congress cannot be denied the power to exercise that control.”
“Undoubtedly the scope of this power must be considered in the light of our dual system of government and may not be extended so as to embrace effects upon interstate commerce so indirect and remote that to embrace them, in view of our complex society, would effectually obliterate the distinction between what is national and what is local and create a completely centralized government.”
“When industries organize themselves on a national scale, making their relation to interstate commerce the dominant factor in their activities, how can it be maintained that their industrial labor relations constitute a forbidden field into which Congress may not enter when it is necessary to protect interstate commerce from the paralyzing consequences of industrial war?”
Frequently cited
“We are asked to shut our eyes to the plainest facts of our national life and to deal with the question of direct and indirect effects in an intellectual vacuum.”
“The act does not compel agreements between employers and employees. It does not compel any agreement whatever.”
Medical Lens
The opinion concerns federal power over labor relations in a steel company and raises no question of health, illness or medicine.